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The main opposition party Tuesday announced it will push for a tax increase on the wealthy and big corporates to address income disparity, in a direct countermove against the government’s own version released last week.
The Minjoo Party of Korea said it will also push to reform the current tax code to prevent any tax evasion attempt. They plan to impose higher inheritance taxes and restrict creation of corporations under false names for real estate rental purposes to avoid taxation.
Changes to income and corporate taxes were not included in the government’s tax reform plan released on Jul 28. The Ministry of Strategy and Finance reiterated on Tuesday hiking up the taxes would undermine investment and consumption.
The Minjoo Party of Korea said it will also push to reform the current tax code to prevent any tax evasion attempt. They plan to impose higher inheritance taxes and restrict creation of corporations under false names for real estate rental purposes to avoid taxation.
Changes to income and corporate taxes were not included in the government’s tax reform plan released on Jul 28. The Ministry of Strategy and Finance reiterated on Tuesday hiking up the taxes would undermine investment and consumption.
The Minjoo Party’s chief policy strategist Rep. Byun Jae-ill said: “Our proposal aims to ensure fairness and transparency in the taxation system ... Raising the taxes is also a precondition for implementing aggressive expansionary fiscal policy.”
The central-left party’s tax plan calls for 41 percent tax on the individuals whose annual income tops 500 million won ($450,000). Currently, the government imposes 38 percent income tax on the individuals making 150 million won and more per year.
The proposal includes a plan to hike tax on corporates with over 50 billion won in net profit from 22 percent to 25 percent. The Minjoo Party has already proposed a relevant bill aiming to increase corporate tax, which was the party’s pledge during the latest election.
Currently, the maximum corporate tax rate of 22 percent is levied on businesses with over 20 billion won in net profit. The party expects that their proposal would incur additional tax revenue worth 3 trillion won.
The party also pursues changes to the way the businesses pay for value-added tax. In order to prevent some companies from evading taxes by manipulating their business records, they suggested credit card companies directly pay for the VAT currently imposed on entities such as big supermarket and department stores.
“Though the consumers pay the price of VAT when purchasing products and service, some companies end up not paying them to the National Tax Service,” said the Minjoo Party’s deputy chief policymaker Rep. Choi Woon-youl. “The actual amount of taxes collected falls nearly 10 trillion won short each year,” he said.
In a move to prevent tax dodges prevalent among big conglomerates, the party seeks to raise taxes levied on stock ownership transfers for both listed and unlisted shares from 20 to 25 percent. They also plan to reduce deductibles on inheritance tax from 10 to 3 percent.
The tax plan was welcomed by the second-biggest opposition People’s Party, who argues that the tax increase is needed to raise tax revenue. The centrist party plans to announce its own version of tax reform this September.
But the government and the Saenuri Party dismissed the proposal, saying that the tax increase would hinder economic growth. The Saenuri Party’s chief strategist Rep. Kim Gwang-lim on Tuesday noted that most countries are slashing taxes to boost their economy.
Instead, the conservative party said that it would consider holding a public debate over the tax code with opposition parties. “We should open up ourselves (about the tax code) and inform the public of the current system,” said the Saenuri spokesperson Rep. Min Kyung-wook.
By Yeo Jun-suk(jasonyeo@heraldcorp.com
The central-left party’s tax plan calls for 41 percent tax on the individuals whose annual income tops 500 million won ($450,000). Currently, the government imposes 38 percent income tax on the individuals making 150 million won and more per year.
The proposal includes a plan to hike tax on corporates with over 50 billion won in net profit from 22 percent to 25 percent. The Minjoo Party has already proposed a relevant bill aiming to increase corporate tax, which was the party’s pledge during the latest election.
Currently, the maximum corporate tax rate of 22 percent is levied on businesses with over 20 billion won in net profit. The party expects that their proposal would incur additional tax revenue worth 3 trillion won.
The party also pursues changes to the way the businesses pay for value-added tax. In order to prevent some companies from evading taxes by manipulating their business records, they suggested credit card companies directly pay for the VAT currently imposed on entities such as big supermarket and department stores.
“Though the consumers pay the price of VAT when purchasing products and service, some companies end up not paying them to the National Tax Service,” said the Minjoo Party’s deputy chief policymaker Rep. Choi Woon-youl. “The actual amount of taxes collected falls nearly 10 trillion won short each year,” he said.
In a move to prevent tax dodges prevalent among big conglomerates, the party seeks to raise taxes levied on stock ownership transfers for both listed and unlisted shares from 20 to 25 percent. They also plan to reduce deductibles on inheritance tax from 10 to 3 percent.
The tax plan was welcomed by the second-biggest opposition People’s Party, who argues that the tax increase is needed to raise tax revenue. The centrist party plans to announce its own version of tax reform this September.
But the government and the Saenuri Party dismissed the proposal, saying that the tax increase would hinder economic growth. The Saenuri Party’s chief strategist Rep. Kim Gwang-lim on Tuesday noted that most countries are slashing taxes to boost their economy.
Instead, the conservative party said that it would consider holding a public debate over the tax code with opposition parties. “We should open up ourselves (about the tax code) and inform the public of the current system,” said the Saenuri spokesperson Rep. Min Kyung-wook.
By Yeo Jun-suk(jasonyeo@heraldcorp.com
